Combined Alabama/Florida Leagues Underscore Economic 'Urgency'
"The very survival of state leagues is now at stake in these challenging times which is why our consolidation becomes so important," declared Stephen Swofford, the chairman of the Alabama league, which will morph along with the Florida league into the new League of Southeastern Credit Unions.
Leaders of the two leagues argued anew that regional compacts like this one underscore and "give validity" to the consolidation trend.
"The merger of GTE [FCU] and Suncoast [Schools FCU] is a perfect example of the economic challenges that lie ahead," declared Swofford as he elaborated on the advantages and opportunities now available in a combined league. The two Tampa CUs have been hit hard by large loan delinquencies and are considering a merger to create an $8.1 billion CU, the largest CU merger to date.
The dwindling number of CUs in the two states, said Swofford, coupled with shrinking dues income "and now the move to recapitalize the corporates," has given impetus to the formation of LSCU.
Swofford, who also is president/CEO of Alabama CU of Tuscaloosa, maintained that under the LSCU umbrella, CUs of all sizes in the two states can now take advantage of "what each league offers and has done best separately."
For example, the Alabama league has a sophisticated audit and compliance operation that now can be expanded to Florida and continue a positive income stream. "And Alabama credit unions can take advantage of repossession and remarketing services offered by the Florida league and which have become very popular," said Swofford.
And Guy M. Hood, the soon-to-be-retired president/CEO of the Florida Credit Union League, said LSCU offers new growth opportunities in mortgages, particularly now that Fannie Mae and Freddie Mac appear to be falling under direct government control, allowing CUs "to serve as low-cost loan originators."
Hood forecast that more state leagues, perhaps in the South or Southwest, would eventually follow in the LSCU's footsteps, "provided we do this right and the model works."
Both the Texas and Mississippi leagues, he said, for example could affiliate one day, though leaders in both states say they are not considering such a move now.
"We're not trying to create a master league of the Southeast," insisted Hood. He added, however, that LSCU could indeed become a trendsetter. LSCU, which would represent 332 CUs in the states, won formal approval by league members in separate votes two weeks ago. The boards of the two leagues previously approved the compact.
Under the new structure, LSCU will be incorporated and have offices in Birmingham, but its headquarters and new CEO will likely be in Tallahassee, an issue to be determined by the new board and CEO. A service affiliate of the Texas league has been contracted to recruit a new CEO, said Hood.
Hood and Alabama league President/CEO Gary B. Wolter, both in their mid-60s and veteran league managers, had earlier announced their plans to retire over the summer and allow a smooth transition.
Meanwhile, there was new evidence last week that leagues including Alabama and Florida have been moving ahead with various cost cutting steps to support member CUs facing income loss under the bailout assessment. Still, fears arose that conference attendance may take a sharp hit later in 2009 and 2010.
The Florida league said it was expecting a 25% decline in attendance for its June convention in Orlando while the California/Nevada League was projecting a decline for its Big Valley Educational Conference meeting this week in Monterey, which was scaled back.
Additionally, the Maryland/DC Credit Union Association said, as a way "to help credit unions control expenses," it is moving its June 11-12 annual convention from Ocean City to Baltimore and condensing the conference from three to two days.
"I hope credit union leaders agree that the MDDCCUA Board of Directors understands their priorities and has responded accordingly," said Wesley Bone, the chairman of the association.